2012 Sichuan Dairy Industry Report
General Introduction:
Dairy industry is not one of the pillar industries in Sichuan. Both its market scale and
output volume are lacking behind compared to regions located in the Northern part
of China. Most of dairy cattle farming and dairy processing is located in Meishan city.
Meishan’s milk output accounted for a large proportion of the total provincial dairy
output.
There are over 1.34 million dairy cows. The total output of milk production reached
0.78 million tons in 2012, an increase by 2.4% over the previous year. 42.5% of the
milking was done by milking machines. There are 244 cow-breeding farms, most of
them are small in size. There are 40 moderate sized farms with a breeding capacity of
200 to 1000 heads, mainly located in the Chengdu flatlands. Almost 40% of the total
dairy cattle in Sichuan province are in Meishan city, one hour drive south from
Chengdu.
Market Situation
There are 72 dairy product processing companies in the province of Sichuan, 85% of
which are located in Chengdu and Meishan city. At present, the daily milk processing
capacity in Sichuan is 5500 tons and annual processing capacity is 1.95 million tons.
Until 2011, only 31 companies gained permission to produce dairy products; most of
them process fluid milk. Since milk supplied by local famers and companies cannot
meet the demand of the market, milk processing companies have to purchase about
140～180 tons of milk from other provinces every day.
Forage prices and plague prevention costs related to cow breeding rose by 10% and
25% respectively; labor prices and dairy cattle costs increased and the milk selling
price dropped: all these factors resulted into a very low margin for dairy farmers and
companies.
In terms of milk consumption, 28 kg dairy products were consumed per head of the
Sichuan population in 2012. In the provincial capital of Chengdu, each person spent
342.2 RMB on dairy products during the year 2012, accounting for 6.1% of his/her
total food consumption costs.
Development trend
Because the amount of milk which is being produced in Sichuan cannot meet the
market demand, dairy processing companies have started to build up their own
pastures, and more private entrepreneurs as well as individual farmers will step in
the dairy cattle farming business.
Challenges
- The cattle breeding industry is characterized by high costs and low margins.
Around 30% of the private milk cattle famers stopped cattle breeding and turned to
other businesses
- 90% of large scale farming companies suffered considerable losses. For instance,
companies that are breeding 300 to 400 milk cattle were booking losses of 0.3 to 0.5
million RMB.
- 18% - 20% animal death rate. The hot and humid weather conditions caused
hoof and other diseases. Epidemic disease control and prevention have been causing
big problems
- Milk processing companies have set the purchasing prices which they pay to the
farmers. This has generated conflicts between the farmers and milk processing
companies. The central government has issued special policies to support farmers,
but it will take time before any effect can be seen.
Local strong players
New Hope Group http://www.newhopedairy.cn/
Chengdu Jule Enterprise Co., Ltd. http://www.jule.com/
Xuebao Dairy http://www.xuebaoruye.com/home.asp
Yangsen Dairy http://www.ysruye.com/
Sources:
http://www.scxmsp.gov.cn/ztlm/zt07/201304/t20130413_183226.html
http://www.scxmsp.gov.cn/ztlm/zt01/201305/t20130531_187487.html
http://www.scxmsp.gov.cn/ztlm/zt07/201303/t20130323_181265.html